Indirect Integration: Orchestrating Complementors behind Competitors to Shrink Platform Boundaries in Digital Multi-sided Platform Ecosystems

Abstract–-Firms constantly make decisions about whether to create new products and service offerings in-house or collaborate with external firms for sustainability and growth. How to define the scope of a firm’s boundaries and how to enhance and leverage its ability to capture value are key issues in the fields of strategic management and management of technology and innovation. Furthermore, with recent digital convergence, factors and mechanisms of boundary setting of digital multi-sided platform ecosystems’ (DMPEs) platform sponsors are recognized as essential elements for firm sustainability and growth. However, previous studies have only presented theoretical hypotheses. In this study, to clarify the factors and mechanisms of firm boundary setting, we established relevant hypotheses for platforms and complementors based on previous studies. Using empirical data from platforms in the video game industry, a typical DMPE, we conducted a time-series analysis of the dynamics of boundary setting for platform sponsors and game developers as complementors. The results provide an indirect integration mechanism that allows platform sponsors to gain new complementors by increasing the number of pseudo-sides without extending their boundaries in a mature DMPE, where technology convergence is advanced and multi-homing occurs.